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Market Failure

Occurs when the outcome in a free market is not efficient, meaning that there is another possible outcome where scarce resources are allocated in a way that creates greater net benefits. Many economists and politicians view a market failure as grounds for economic intervention by the government.

Steve Horwitz - Regulation and Intervention

Mark Hendrickson - The Truth About Monopoly and Antitrust

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Why Those Who Value Liberty Should Rejoice

OCTOBER 15, 2009

Elinor Ostrom is the first woman to win the Nobel Prize in Economic Sciences. She is also one of the most iconoclastic thinkers to win the prize. Professor Ostrom's work focuses on the mechanisms of self-governance that operate in different societies.

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From an economic point of view, a scarce good is a scarce good, whether it is medical care or sirloin steak. The problem is that government has piled intervention on top of intervention, and driving up the costs and making care less available in the process.

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Should governments regulate and intervene to correct "market failures?"

Steve Horwitz explains the dynamics of interventionism and the issues with regulating and intervening in the free market.

"What regulation and intervention do is prevent markets from discovering new ways of solving existing problems and new ways of solving new problems. When regulation erects barriers to entry or other kinds of limits on market behavior, it cuts short this discovery process, and that leads to inefficiency and waste of resources."

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December 2014

Unfortunately, educating people about phenomena that are counterintuitive, not-so-easy to remember, and suggest our individual lack of human control (for starters) can seem like an uphill battle in the war of ideas. So we sally forth into a kind of wilderness, an economic fairyland. We are myth busters in a world where people crave myths more than reality. Why do they so readily embrace untruth? Primarily because the immediate costs of doing so are so low and the psychic benefits are so high.